Philip Morris rises as Citi moves to Buy on undervalued growth potential

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Philip Morris rises as Citi moves to Buy on undervalued growth potential
Credit: © Reuters.

Philip Morris (NYSE: PM ) shares are trading about 1.5% higher in pre-open Tuesday after Citi upgraded them to Buy and opened a Positive Catalyst Watch.

Analysts also boosted the price target to $117 per share from the prior $109 as they believe the market is undervaluing PM’s growth profile.

“With NGPs contributing meaningfully to industry and PM’s performance in particular, we believe investors are at risk of structurally under-valuing this evolving segment,” they said in a note.

Analysts also see attractive valuation as the stock is trading on a -26% discount to U.S. Staples. Similarly, PM’s IQOS is trading on a -35% discount to higher growth Staples.

“Given PM’s global leadership in NGPs (2022-27E CAGR of c.16%), and potential for further mid-term upside from the roll-out of IQOS in the US, we believe the market is failing to adequately value the group’s future growth and cash-flow prospects,” analysts added.

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